LANSING, Mich. — Gov. Jennifer Granholm has signed a package of legislation designed to provide incentives to consumers to buy ethanol and biodiesel for their vehicles, and to spur investment in the fledgling biofuels industry.

“The state that put the world on wheels will be the state that makes those wheels independent of foreign oil,” Granholm said in a statement released to reporters last month. “As more E85 and flex-fuel vehicles are produced by the Big Three automakers, it is essential that we make biodiesel and ethanol products more widely available to encourage their use.”

The package taxes ethanol and biodiesel at lower rates than gasoline. Gas is taxed by the State of Michigan at a rate of 19 cents per gallon, while diesel is taxed at 15 cents per gallon. The new legislation provides for a tax of 12 cents per gallon for gasoline-ethanol blends that are at least 70 percent ethanol. That would include the E85 blend.

Diesel fuel that’s at least 5 percent biodiesel would also be taxed at 12 cents per gallon.

The legislation creates a matching grant program to help gas station owners retrofit some of their pumps for use with E85 ethanol or a biodiesel blend. Up to $3,000 for each gas station could be granted to convert an existing gas pump. A grant of up to $12,000 for each gas station could be granted to install a new E85 pump, and up to $4,000 for a new pump to dispense biodiesel.

This program is being funded to the tune of $500,000 initially and will be awarded to recipients by Sept. 30 of next year.

The law also requires all state-vehicle gas stations to add biodiesel and E85 pumps.

The legislation also creates a renewable fuels commission that will help guide the new efforts to promote alternative fuel use in the state. The commission will be made up of representatives of corn and soybean producers, automakers, ethanol producers, environmentalists, biodiesel producers, gas sellers, as well as people from state government and colleges and universities.

The legislation also provides for 10 additional “renaissance zones” that will provide for tax breaks for biomass energy facilities of all kinds and for agricultural and forest product processing facilities, including those that serve the biomass energy industry.

Granholm sees the legislative package as one part of a broad effort to encourage and implement the use of alternative fuels in Michigan.

“All of these are important steps to fulfilling Michigan’s next great destiny – making our state and our nation independent of foreign oil,” Granholm said.

The renewable fuels package consists of seven pieces of legislation: Public Acts 268-274.

This farm news was published in the August 9, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.